Speculation continues to mount about the future of Irvine-based Standard Pacific Corp.
The embattled homebuilder, the country’s 11th largest by sales in 2006, is seeing its stock rocked again this month thanks to rumors of a possible bankruptcy filing.
The latest hit came on Jan. 11 after the Financial Times Group’s Debtwire reported that Standard Pacific hired Miller Buckfire & Co., a New York-based debt restructuring and bankruptcy specialist.
Standard’s shares, down about 90% in the past year, fell an additional 20% on the report. The stock kept sliding last week on more bad news for homebuilders.
The company now counts a market value of $150 million, down from a peak of $3 billion at the height of the housing boom in 2005.
Standard declined to address the Debtwire report, citing company policy against commenting on speculation. As recently as December, executives said no bankruptcy filing was in the works.
‘Good Record’
“We have a good record with our banks and a plan in place to generate and preserve cash,” Chief Executive Stephen Scarborough said at an investor conference late last year.
A hiring of Miller Buckfire would indicate Standard is looking at all of its options, said Marc Winthrop, founder of Newport Beach-based Winthrop Couchot Professional Corp., a law firm that specializes in bankruptcies.
“When you hire a firm that high-profile, it means that you’re at least examining the prospect of filing,” he said.
Standard has been cited by analysts as one of the major homebuilders most likely to file for bankruptcy based on a bulk of its operations in the slowing housing markets of California, Florida, Arizona and Nevada.
The company also is burdened by a heavy debt load, including some $300 million due in the next 15 months.
At the end of September, Standard had $5.1 million in cash and another $22 million at its mortgage banking subsidiary, according to analysts with research firm CreditSights Ltd.
Standard “may be attempting to negotiate with its bondholders in terms of covenants and waivers, and potentially restructuring its existing debt,” analysts with JP Morgan said in a report last week.
The analysts characterized the Miller Buckfire hiring speculation as “disconcerting.”
Like most national builders, Standard has started selling land and some developments to generate cash.
In January, Standard sold off land and developments in Texas and Arizona, which totaled more than 3,000 home lots.
Cleveland-based Forest City Enterprises Inc. and investor Covington Capital Corp. of Santa Monica bought more than 2,500 home lots in San Antonio from Standard.
In Tucson, Miramonte Homes, a newly created company headed by a former Standard executive bought about 70 homes under construction and 700 vacant lots.
More Bankruptcies
More real estate bankruptcies are expected this year as the market continues to weaken, according to Winthrop.
“We’re seeing a big influx of real estate matters,builders, developers and related firms, like nurseries and home furnishing companies,” he said.
Last week, Irvine’s Atherton-Newport Investments LLC, an apartment investor and developer, filed for Chapter 11 bankruptcy in Santa Ana.
The company has about 5,000 apartments in Las Vegas, Phoenix, Seattle and South Florida, as well as two housing developments in Southern California.
“It’s still early on,” Winthrop said. “Companies are still deciding whether to file, or to take bailouts.”
